Building Your Down Payment

Many borrowers qualify for a mortgage loan, but they can't afford a large down payment. Want to buy a new home, but aren't sure how to put together your down payment?

Tighten your belt and save. Be on the look-out for ways to trim your expenses to put away money for a down payment. You also could enroll in an automatic savings plan to have a portion of your payroll automatically deposited into your savings account. You might look into some big expenses in your spending history that you can do without, or trim, at least temporarily. For example, you may decide to move into less expensive housing, or stay close to home for your annual vacation.

Sell things you do not need and get a second job. Try to find an additional job. This can be rough, but the temporary difficulty can provide your down payment money. You can also seriously consider the possessions you really need and the things you can sell. Maybe you own collectibles you can put up for sale on an online auction, or household items for a garage or tag sale. Also, you can think about selling any investments you own.

Tap into retirement funds. Investigate the parameters of your specific program. Many homebuyers get down payment money from withdrawing from their Individual Retirement Accounts or borrowing from their 401(k) programs. Be sure you understand about any penalties, the effect this will have on income taxes, and repayment terms.

Ask for assistance from generous family members. Many buyers somtimes receive down payment help from caring parents and other family members who may be eager to help them get into their first home. Your family members may be pleased to help you reach the goal of owning your first home.

Contact housing finance agencies. Special mortgate loan programs are offered to homebuyers in specific situations, such as low income homebuyers or future homeowners looking to improve houses in a specific part of town, among others. Working with this kind of agency, you can receive a below market interest rate, down payment help and other benefits. These types of agencies can help you with a reduced interest rate, get you your down payment, and offer other advantages. The main purpose of non-profit housing finance agencies is build up residential ownership in particular areas.

Research no-down and low-down mortgages.

  • Federal Housing Administration (FHA) mortgage loans

    The Federal Housing Administration (FHA), a part of the U.S. Department of Housing and Urban Development (HUD), plays a significant role in helping low to moderate-income buyers get mortgage loans. Part of the United States Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) aids individuals who wish to get mortgages. FHA offers mortgage insurance to the private lenders, helping the buyers to become eligible for financing. Interest rates for an FHA mortgage are typically the going interest rate, but the down payment with an FHA mortgage are lower than those of conventional loans. The required down payment can go as low as three percent and the closing costs can be included in the mortgage.

  • VA mortgages

    With a guarantee from the Department of Veterans Affairs, a VA loan qualifies service people and veterans. This specialized loan requires no down payment, has limited closing costs, and provides a competitive interest rate. While the mortgages aren't actually financed by the VA, the office verfifies borrowers by issuing eligibility certificates.

  • Piggy-back loans

    A piggy-back loan is a second mortgage that closes with the first. Usually the first mortgage is for 80% of the cost of the home and the "piggyback" is for 10%. Rather than the traditional 20 percent down payment, the homebuyer will just have to cover the remaining 10 percent.

  • Carry-Back loans

    In a "carry back" agreement, the seller agrees to lend you a piece of his own equity to help you with your down payment funds. The buyer funds most of the purchase price through a traditional mortgage program and finances the remaining funds with the seller. Often, this kind of second mortgage will have higher interest.

The feeling of accomplishment will be the same, no matter how you manage to pull together the down payment. Your brand new home will be your reward!

Need to talk about the best options for down payments? Give us a call at 9727982110.


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